Protecting Your Intellectual Property Before a Key

COMMUNITY
LAW
Protecting Your Intellectual Property
Before a Key Employee Leaves
BY DAVID CHRISTOPHER BAKER, Esq.
The departure of a key employee, whether pany must allow key employees access to IP.
on good terms or bad, can be a stressful time for This doesn’t mean that access should be unfetany management company. There are a myriad tered or unmonitored, and it certainly does not
of issues to address including such things as sev- mean that employees should be allowed the operance packages, COBRA benefits and the portunity to copy, alter or even delete such intransition of open matters to continuing em- formation with impunity. You must institute
ployees. But, one of the most difficult aspects of and regularly enforce your IP protection protoan employee separation is the proper handling cols so when a departure occurs, whether it is
of Intellectual Property (IP). Key employ- voluntary or involuntary, the management
ees/principals, by the very nature of their im- company is prepared to handle the departure
portance to the management company with a minimum of interruption of your daily
invariably have access,
business.
often times, unlimited acVirtually every business is
cess, to key company inThe departure of subject to attack from within,
formation and data. This
and after a key employee deinformation or IP usually
parture, there is often a disa key employee,
takes the form of trade sepute over ownership and
crets and can consist of
control of key contacts and
whether on good
client and contact inforclient files. A couple of commation, prospects lists,
mon sense steps YOU can
terms or bad, can
goods and services parts
take to avoid this happening
and pricing lists, business
be a stressful time to you and your business are:
protocols and procedures
1. When a key employee
and a virtually unlimited
talks about their departure
for any managenumber of other proprifrom prior employment, listen
etary information. Other
and learn from their comment company.
forms of IP, such as copyments.
2. When an employee exrights, trademarks and
patents, are usually not an issue in an employee presses dissatisfaction with their job, listen
separation because their ownership and regis- carefully. Employees who are unhappy at work
tration have been well-documented and clearly often will talk to co-workers and sometimes
remain the property of the business during and even upper management about their plans for
following a key employee departure. However, the future. While these comments often appear
it is critically important to a management com- to be simple gripes, there are nuggets of truth
pany to prepare for the departure of even its which can reveal actual plans. Look for these
subtle clues and use them to lock down that
most important employees.
In order to function the management com- employee’s access to your IP and limit any poNOVEMBER 2013
22 THE JOURNAL
tential damage.
Know Your IP! Any business or management company that does not know what information is most important to their business
cannot protect it. If files are open to every employee in the organization, it is virtually impossible to maintain their integrity in the event of
a key employee departure. If there is no monitoring system for access to that information or to
routinely verify its very existence, the same
holds true. The information is vulnerable to attack.
Implement Reasonable Security Measures!
While this is obvious, such things as locks on
doors and encrypted passwords on computers
and limited handling of confidential hard copies
can be easy, cost-effective ways to protect the
integrity of your IP. A good IT professional can
assist you in establishing protocols that will
monitor the use of information, back it up and
limit any destructive intent by a departing employee.
Know Your Ethical Obligations! Most businesses have mandated ethical standards they
must maintain to protect their information,
such as sensitive client information, credit and
credit card data, the identity of minors, etc.
Don’t be fooled into thinking that a key employee by virtue of their title will respect the integrity of such information merely because of the
requirement that he or she adhered to a code of
ethics or conduct.
Document-Document-Document! Often
when a disgruntled employee is planning to
leave, they will start plotting their strategy—
copying documents, downloading files, etc.
There are always signs that an employee is get-
ting ready to leave, and you will know what
they are for your business. Watch for those
signs, take note and report immediately up to
the chain of command, and most importantly—
take action. After meetings are conducted,
draft a confirming document for management
personnel to review. Management should be
informed of any decisions by the higher chain of
command that affects both the employee’s continued employment and his or her access to the
management company’s IP.
Lock Down All Access at Termination. Although this is fairly obvious, this is a very important final step in securing your IP. You need
to change passwords, collect keys and retrieve
pass cards or any other forms of data access. Exiting employees should not be allowed access to
company property, in particular computers, file
management systems and hard copies, once
management is aware of their impending departure. This is critical to the integrity of your
management company’s IP. If after the termination of the employment relationship, there is
a breach, it will most likely be considered a
crime and the property authorities can be notified.
Damage Control. This includes informing
clients about the transition, providing press releases to local and industry publications—if applicable, and posting to our management
company’s website. After a departure, a management company should be sensitive to signs
that data has been lost or compromised—such
as sudden client departures, unsolicited phone
calls, unexpected complaints about issues of
which you were unaware.
***
There is no “magic bullet” to prevent a key
employee from abusing their access to sensitive
corporate or business IP. The nature of this relationship makes it impossible. But—a business
or management company that is sensitive to its
obligations and has the proper internal controls
in place, will be able to minimize any detrimental effect resulting from a key employee’s depar-
ture. The end of an employment relationship
with a key employee does not have to be the end
of time for a business.
T
J
Dave Baker is partner with the California law firm
of Hart, King & Coldren. He has over 25 years of
wide ranging Intellectual Property protection and enhancement, commercial transactions and litigation
and real property litigation. Dave can be reached at
(714) 432-8700 or at [email protected]. Dave
hosts a series of monthly IP Webinars, the next of
which is scheduled for Wednesday, December 11,
2013 at 10 am PST) – Trade Secrets & Non-Disclosure Agreements. If you are interested in registering for this webinar or the 2014 IP webinar
series, please email Barbara Ericson at (714) 4328700 or at [email protected].
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